The Day Ahead: Personal Income, Consumer Sentiment, Fed Speak

Rates moved mostly sideways overnight before making a break through key resistance early in the N.Y. session. Trading volume was low as Japan has checked out for Golden Week and the rest of the world is focused on the Royal Wedding.

The 10yr note is currently +4/32 at 102-23 yielding 3.299%. The FNCL 4.5 is +2/32 at 102-27. SP futures are +0.18% at 1357.50.

KEY EVENTS IN THE DAY AHEAD

8:30 ― The Personal Income Outlays
survey is expected to show that income rose 0.3% for the second
straight month, while spending should rise 0.5% following a 0.7% gain
the month before. Core prices are to inch forward 0.1%, versus a 0.2%
gain a month before. The survey won’t necessarily get too much
attention, as much of the data will already be known from the GDP report
a day before.

“Rising employment is supporting incomes, but
incomes are not keeping pace with price inflation,” said economists at
IHS Global Insight. “Consumer spending is expected to increase 0.5%, but
after adjusting for inflation that should translate into only a 0.1%
real increase.”

They added that much of the nominal spending “will be swallowed up by higher energy and food prices.”

8:30 – Federal Reserve Bank of St. Louis President James Bullard
gives morning remarks before the Federal Reserve Bank of San
Francisco’s “The Changing Landscape of Community Development Linking
Research with Policy and Practice in Low-Income Communities” 2011
Community Affairs Research Conference.

9:45 ― The Chicago Business Barometer is anticipated at a
robust 68 in April, marking a slight dip from the 70.6 reported in March
and the multi-decade high of 71.2 the month before.

“Respondents
of the [March] survey claimed that higher commodity prices could hurt
their future profits,” said economists at Nomura. “We expect this
sentiment to be reflected in the moderate decline in the index, albeit a
high level by historical standards.”

9:55 ― The final Consumer Sentiment
survey for the month is expected to remain at 69.6 after gaining a
moderate 2.1 points in the preliminary reading two weeks ago. The
expected gain would be a turn in the right direction, but at near-six
month lows it’s not much to be excited about.

12:30 ― Federal Reserve Chairman Ben Bernanke speaks on
“Community Development in Challenging Times” before Federal Reserve Bank
of San Francisco “The Changing Landscape of Community Development
Linking Research with Policy and Practice in Low-Income Communities”
2011 Community Affairs Research Conference. No
QA